Tesco threatens legal recourse after OFT 'absurdity'

By Ben Bouckley

- Last updated on GMT

Related tags Oft Law

Tesco threatens legal recourse after OFT 'absurdity'
Tesco has expressed "surprise and dismay" at an Office of Fair Trading (OFT) ruling that it must pay £10.43m for allegedly colluding with other retailers and suppliers to fix cheese prices in 2002 to 2003.

Hinting at legal action, Tesco described the OFT's ruling - which was announced yesterday and also covers dairy processors​ Arla, Dairy Crest and Robert Wiseman Dairies - as "entirely without substance"​ .

Long delays in resolving the cases coupled with evidential flaws, the retail giant said, illustrated "important weaknesses in the current UK competition regime".

Tesco director of corporate and legal affairs, Lucy Neville-Rolfe, said: "We are disheartened and disturbed that the OFT continues to pursue this costly and time-consuming case at the expense of both the tax payer and UK business.

"This is all the more surprising given that the OFT itself said that ‘competition in the supermarket sector is generally intense and has delivered significant benefits to shoppers',​ Neville-Rolfe added.

"We have always said we did not collude on prices on cheese and we stand firm in our rebuttal of these ongoing allegations. We will continue to defend our position vigorously, through the courts if necessary," ​she said.

Tesco described the OFT's 2010 decision to drop 2002 milk and 2003 milk/butter allegations against Tesco as a "significant climb-down by the OFT, since it had been the central plank of its case".

Investigator, prosecutor, judge...

The UK's largest retailer insisted it had firm evidence that it did not collude with other retailers over 2002 cheese prices.

Neville-Rolfe said: "We surely have now reached the stage where the absurdity of the OFT operating as investigator, prosecutor and judge cannot be allowed to continue. The government’s plans for the new competition regime must address this anomaly, in the interests of the consumer and the business community."

While he declined to comment on Tesco's response, an OFT spokesman told FoodManufacture.co.uk: "We made our position clear yesterday. All parties to yesterday's decision have two months to appeal, and the deadline for appeals is October 11."

He added that the OFT's decision was open to challenge via the Competition Appeals Tribunal. This specialist judicial body decides cases involving competition or economic regulatory issues.

The spokesman explained the OFT's ruling process: "It involves us carrying out a Competition Act investigation and publishing a statement of objections, which parties such as Tesco can then respond to. The OFT then reaches its decision," ​he added.

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